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If you’ve been researching SBA franchise startup loans, you may have noticed something confusing: every bank seems to offer different terms.
Some will finance 70% of your project. Others go up to 90%. Some won’t touch a deal with construction involved—others are happy to include it.
So what's going on here?
In this vlog recap, I’ll explain exactly why SBA loan terms vary from lender to lender, what “prudent lending” really means, and how to get matched with the right bank for your unique franchise startup.
SBA Guidelines Aren’t One-Size-Fits-All
Let’s start with the basics: yes, the SBA does publish Standard Operating Procedures (SOPs) that all lenders must follow. These guidelines set things like:
- Maximum SBA guarantee limits
- Eligible use of proceeds
- Collateral requirements
- Creditworthiness expectations
But—and this is key—those SOPs still leave a LOT of room for interpretation.
This is what’s known in the industry as “prudent lending.”
That means each bank is expected to use its own judgment when evaluating loan risk.
What Is “Prudent Lending” in Practice?
Prudent lending is basically how banks interpret and apply the SBA guidelines based on:
- Their risk appetite
- Industry experience
- Capital reserves
- Internal credit policy
So while the SBA allows banks to go up to 90% loan-to-cost (LTC), not all banks feel comfortable with that. Here’s a snapshot of how lenders may differ:
| Loan Type | Conservative Bank | Aggressive Bank |
|---|---|---|
| Franchise Startup Loan | 70% LTC | 90% LTC |
| With Construction | Not interested | OK with draws |
| New Business Owners | Avoided | Accepted |
| Hospitality / Hotels | High risk | Sweet spot |
Bank Appetite Varies by Industry and Deal Type
Some lenders specialize in specific asset classes. A bank that loves franchise restaurants might avoid hotel startups, and vice versa.
Even more important? Some lenders only want existing businesses, while others are more open to brand new startup locations—as long as you’re backed by a strong franchisor and a solid business plan.
This is why your deal might get declined at one bank, and approved at another with better terms.
How We Match You to the Right Lender
Here’s where our team adds massive value.
We know the lenders. We know who’s aggressive with franchise startups. We know who funds construction-heavy deals. And we know how to position your loan to get the best possible terms.
Think of us like the matchmaker between your business goals and the right SBA lender.
What to Do Next
✅ Ready to explore your loan options?
Book a free consult at bookwithbeau.com. We’ll go over your deal, talk strategy, and match you with lenders who fund your type of business.
🔍 Looking for franchise resales instead of a startup?
Check out franchiseresalelistings.com where you can opt in for a weekly email of available resale listings. We’ll help you find an existing franchise with cash flow from day one.
Final Thoughts
SBA loans aren't cookie-cutter—and banks don't treat them that way.
Understanding how prudent lending works is key to unlocking better terms, faster approvals, and a smoother path to business ownership.
If you're serious about using an SBA loan to fund your franchise, don't try to navigate it alone. Partner with someone who knows the lending landscape.
Let’s build something great.
Watch the full video here:
Why Do Banks Offer Different Terms for SBA Franchise Startup Loans
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